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I'm not going to quote any data for this, but I've been doing personal research for some time on other places I would like to live because Boston winters have worn me out. First, I'm a teacher who makes top salary in my district with 10 years experience and a masters degree. I'm single, so I'm definitely not struggling financially. I also own a condo in Cambridge, MA, which I purchased through the affordable housing program back when I was making almost half of what I make now. It's an amazing program that gave me the opportunity to own instead of throwing rent money down the drain. I paid about 1/4 of the market rate for a lovely home.
With that said, I know I could easily afford living in Honolulu. Living in San Francisco or NYC? NO WAY!!!!
At the same time, Hawaii has absolute **** for affordable housing. Their program (what there is of it) is terrible compared to the programs around here. It's a pity, because there are lots of people who could benefit from programs like that. Even without a decent affordable housing program, they still need better housing options for regular folk. Not everyone can have the best paying jobs and/or the best education. We are diverse. We need to honor that. If places are left with only wealthy people with high-paying jobs, who will do the other work? Who will be left to teach? To police? To wait tables? To landscape? To work daycare? To run a cash register? Everyone deserves a decent place to rest their head. No one should feel punished or suffer for choosing a profession that pays less.
Big OOOPS... I got distracted by a phone call in the middle of writing this and didn't finish editing the FMR table values. I've corrected the error below, and the corrections are in bold.
I think it's interesting to note the Honolulu rents in each category are roughly double what Hawai'i County rents are. That says something right there about how severe lack of housing supply like Honolulu has drives up rents.
[quote=OpenD;37591554]
Looking at this year's limits for two counties in Hawai'i, the maximum household income allowed and maximum rent allowed in housing that gives the owner tax breaks is as follows...
Honolulu County Median Income $82,650
1 person, max income $$53,700 - Effiency max rent $1,267
1 person, max income $53,700 - 1 BR max rent $1,382
4 persons, max income $76,650 - 2 BR max rent $1,820
Hawaii County Median Income $56,700
1 person, max income $37,200 - Effiency max rent $619
1 person, max income $37,200 - 1 BR max rent $780
4 persons, max income $53,100 - 2 BR max rent $950
And this is worth repeating, since it keeps getting missed...
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As long as there is a shortage of housing, prices will remain artificially high. Build a little more housing, it will change nothing. Build a LOT more housing, so there is no longer an artificial shortage, and it will.
Not that anything will make rent cheap, as the guy in the article says, but the rents in Hilo, with a population of 44,000, are like those of a much larger city on the mainland, while the rents in Honolulu are double those, in large part because the housing shortage is so severe there.
There have been housing shortages before. Right after WWII returning veterans seeking to get married and start families were living in converted garages, motel courts, and other marginal accomodations until developers got serious about building starter homes and apartments in quantity. And no, they were not in the best locations, and no, they were not the most luxurious, but they got built... often at the prodding of government.
Low to mid rise, so they don't become concrete canyons... broken up into urban villages, with mixed use amenities, on a human scale. It's doable. It just needs doing. Who's going to do it?
There is not a housing shortage. The problem is too many people wanting to live on this tiny island. The limited resources on Oahu cannot sustain a growing population indefinitely. Subsidized housing only escalates the problem. You will end up growing a large segment of the population that is dependent on entitlements. Someone has to pay for it, the money is not going to fall from the sky. The economy is tourism and military period, and if you want to grow the population your going to have to grow those industries. Try driving to the North Shore during a swell or finding parking at Kailua beach on a weekend, or driving H1 anytime, do you really want more people? The barriers to entry need to be high, it is the only way to sustain a reasonable quality of life. If you build it they will come, and keep coming and create more demand for more subsidized housing.
There is not a housing shortage. The problem is too many people wanting to live on this tiny island. The limited resources on Oahu cannot sustain a growing population indefinitely. Subsidized housing only escalates the problem. You will end up growing a large segment of the population that is dependent on entitlements. Someone has to pay for it, the money is not going to fall from the sky. The economy is tourism and military period, and if you want to grow the population your going to have to grow those industries. Try driving to the North Shore during a swell or finding parking at Kailua beach on a weekend, or driving H1 anytime, do you really want more people? The barriers to entry need to be high, it is the only way to sustain a reasonable quality of life. If you build it they will come, and keep coming and create more demand for more subsidized housing.
That is exactly the problem with trying to grow your way out of the situation by developing the supply side of the equation. The more you build, the more people will come and if you ever build enough to lower price, it will only increase demand. And if you build enough, Oahu will be ruined.
It's nothing personal, you and him/her were arguing about what rental market was most expensive. You are the only one saying Honolulu is the most expensive in the country which is apparently wrong. Hawaii is probably the most expensive state, but Honolulu is not the most expensive city according to the data.
Build enough housing, and differentiate it as I noted above, and it will happen naturally, as it has in the past all over the country with inexpensive neighborhoods, mid-priced neighborhoods, etc. In the case of what I'm calling Basic housing, which the government calls "Affordable Housing," it is fair to limit income, because that portion of the market is supported by favorable property tax breaks. And so it currently is, with the limit set at 80% of the Federal Poverty Level
Looking at this year's limits for two counties in Hawai'i, the maximum household income allowed and maximum rent allowed in housing that gives the owner tax breaks is as follows...
Honolulu County Median Income $82,650
1 person, max income $$53,700 - Effiency max rent $1,267
1 person, max income $53,700 - 1 BR max rent $780
4 persons, max income $76,650 - 2 BR max rent $950
Hawaii County Median Income $56,700
1 person, max income $37,200 - Effiency max rent $619
1 person, max income $37,200 - 1 BR max rent $780
4 persons, max income $53,100 - 2 BR max rent $950
As long as there is a shortage of housing, prices will remain artificially high. Build a little more housing, it will change nothing. Build a LOT more housing, so there is no longer an artificial shortage, and it will.
So am I correct to say that you want the government to essentially subsidize the low end of the housing market? I guess it has its pros and cons like anything but people will just adjust to the new structure like they always do and there will be winners and losers. Will these low end rentals be well maintained by the owners or occupants since neither have any incentive to do so? Will lower-middle class families be disincentivized (sp) from improving their situation financially for fear of hitting a hard cut off with a promotion and losing their subsidies or is it a get in and you stay in kind of thing regardless of your current income? Is this subsidy paid for with federal dollars or state/local tax money? Does the subsidy go to the developer or the renter?
I am also still skeptical that you can outpace demand in the long run by building a bunch of new units. HNL is desirable because it is a relatively safe American city, with all of the amenities of a city (jobs, arts, culture, restaurants) that happens to be in a locale with tremendous weather and natural beauty. Those things aren't going to go out of style anytime soon. Sure you can blitz the place with thousands of new units and temporarily meet demand but how long will that last? It is still an island with limited land, high property values, and a desire to retain it's character and beauty. You never really address this issue when you respond to me. What about the 200,000 Hawaiians scattered across the country, many of them maybe wanting to return home? What about the people with telecommuting jobs that can live anywhere? What about folks that always wanted to move to Hawaii but haven't because it was unaffordable? What about recently wealthy Chinese that are coming to the U.S. in high numbers? I guess what I am getting at is that there will always be a shortage of housing until it becomes so dense and overpopulated that the quality of life goes to sh*t.
I guess I'm not disagreeing with your assertion that there is demand for a lot more housing. I just am skeptical that the demand can be met without just creating more demand. It'll be great for the lucky folks that get these subsidized affordable units I suppose but it doesn't seem like it will stop the cycle unless you can limit immigration to the islands. Who knows though, I'm not an expert on this stuff. What do you think about this HDCA proposal for micro units in Kakaako? Is this what you are hoping for?
Here are some excerpts from a much longer article in Civil Beat about the whys and wherefores of the challenges of renting a home in Hawai'i. Follow the link for the full article and 5 infographics.
To be fair, the original article (which I read) was factually inaccurate.
They cited the median rent for a two bedroom in Portland, OR as being 775.
Bull*hit. I lived in and around Portland for 20 years. The median rent for suburbs 20 miles outside of Portland is around 775 for a two bedroom. Actually living IN Portland, like the article specifically said, results in rents over $1000 for a ONE bedroom.
The authors decision to use fictional figures and pull from a metro area that is literally 6000 ****ing square miles resulted in numbers that were entirely useless for real analysis but supported his argument entirely well. For reference, that 6000 square mile MSA is one of the largest MSAs in the country and the MSA that lies outside of Portland, OR (about 5,800 of those square miles) has very little correlation to the prices within the city.
The author and his editor should be reprimanded for writing about something which they were absolutely ignorant about. The further complaints about the money going to the landlord can be remedied by telling the renters to buy or not rent so close to the ocean. It is not the landlords fault that tenants are choosing to rent instead of buy, or that they are choosing to rent something that is clearly outside of the financial prudent level of expenditures for their income.
Note: They then go on to state how high Seattle's rent is, which is remarkably higher than the figure for Portland. That isn't a miracle, they are using a much smaller geographic area for Seattle rather than diluting the sample with 5800 square miles of suburbs.
PS. "Between 2005 and the end of 2013, the average rent in the islands rose by $236 — which is five and a half times the pace of increases nationally, according to the U.S. Census Bureau’s American Community Survey."
That quote shows the incredible failure of the author to bother using even remotely comparable statistics. He just listed increases in average rent (rather than median) and used a flat dollar amount, rather than a percent, which is by definition not comparable. He really needs to go back to school. If the flat dollar amount increase was equal to the national increase, then Hawaii would be becoming substantially cheaper on a relative basis. /sigh.
To be fair, the original article (which I read) was factually inaccurate.
They cited the median rent for a two bedroom in Portland, OR as being 775.
Bull*hit. I lived in and around Portland for 20 years. The median rent for suburbs 20 miles outside of Portland is around 775 for a two bedroom. Actually living IN Portland, like the article specifically said, results in rents over $1000 for a ONE bedroom.
The authors decision to use fictional figures and pull from a metro area that is literally 6000 ****ing square miles resulted in numbers that were entirely useless for real analysis but supported his argument entirely well. For reference, that 6000 square mile MSA is one of the largest MSAs in the country and the MSA that lies outside of Portland, OR (about 5,800 of those square miles) has very little correlation to the prices within the city.
The author and his editor should be reprimanded for writing about something which they were absolutely ignorant about. The further complaints about the money going to the landlord can be remedied by telling the renters to buy or not rent so close to the ocean. It is not the landlords fault that tenants are choosing to rent instead of buy, or that they are choosing to rent something that is clearly outside of the financial prudent level of expenditures for their income.
Note: They then go on to state how high Seattle's rent is, which is remarkably higher than the figure for Portland. That isn't a miracle, they are using a much smaller geographic area for Seattle rather than diluting the sample with 5800 square miles of suburbs.
PS. "Between 2005 and the end of 2013, the average rent in the islands rose by $236 — which is five and a half times the pace of increases nationally, according to the U.S. Census Bureau’s American Community Survey."
That quote shows the incredible failure of the author to bother using even remotely comparable statistics. He just listed increases in average rent (rather than median) and used a flat dollar amount, rather than a percent, which is by definition not comparable. He really needs to go back to school. If the flat dollar amount increase was equal to the national increase, then Hawaii would be becoming substantially cheaper on a relative basis. /sigh.
With so much data available you can just pick the set that supports your agenda. LOL. Cities, counties, and MSA's are all pretty uniquely organized across the country so it definitely takes some leg work to actually compare apples to apples. Even using a radius from the city center can be problematic for coastal communities where half of that circle may be underwater.
The experts* disagree, and I trust their research and their opinion. It's just common sense that if the state needs 5,000 new units built state-wide in a year to accommodate population growth from all sources, including local births, but only 1,000 units get built, then there will be a deficit of 4,000 total to the supply. Repeat that a second year, and the total deficit will be 8,000 units. Repeat that pattern for five years and the state will be 20,000 units behind.
And that's what has been happening, cycle after housing cycle, for many years. And for people with low to medium incomes, that already bad situation has been made worse because what housing is getting built today is very much skewed to the high end of the market.
The problem is too many people wanting to live on this tiny island. The limited resources on Oahu cannot sustain a growing population indefinitely.
But the immediate problem that urgently needs addressing is too many people already ON the islands for the existing housing supply. What shall we do with them? Load them on canoes and shoo them away at gunpoint? And only let in millionaires, like New Zealand does?
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Subsidized housing only escalates the problem. You will end up growing a large segment of the population that is dependent on entitlements. Someone has to pay for it, the money is not going to fall from the sky.
Subsidized housing is the smallest segment of this issue, perhaps 20%. Subsidized housing is for people below poverty guidelines. But the other 80% of the problem is a shortage of ordinary housing for regular working class people.
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The economy is tourism and military period, and if you want to grow the population your going to have to grow those industries.
Military presence in Hawai'i is reliably predicted to decline, and the tourism industry runs on the very people who have the hardest times with the current housing shortage.
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Try driving to the North Shore during a swell or finding parking at Kailua beach on a weekend, or driving H1 anytime, do you really want more people? The barriers to entry need to be high, it is the only way to sustain a reasonable quality of life. If you build it they will come, and keep coming and create more demand for more subsidized housing.
Sorry, but on average it is the ones who keep coming who have the least problem with high housing costs. The ones having the most problem are the ones who are already here, the ones who have lived here all their lives.
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Originally Posted by WaikikiBoy
That is exactly the problem with trying to grow your way out of the situation by developing the supply side of the equation. The more you build, the more people will come and if you ever build enough to lower price, it will only increase demand. And if you build enough, Oahu will be ruined.
See above. If you don't build enough, life for middle income Hawaiians will be ruined.
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Originally Posted by UHgrad
It's nothing personal, you and him/her were arguing about what rental market was most expensive. You are the only one saying Honolulu is the most expensive in the country which is apparently wrong. Hawaii is probably the most expensive state, but Honolulu is not the most expensive city according to the data.
Correct. The State Median Rent, not average rent, but the rent that is exactly the middle value between all values, is the highest in the country, and is 50% higher than the US average, per the article I started this thread with. City of Honolulu is among the highest cities for rent, but is not #1. But since average Honolulu salaries are so much lower than key mainland cities, it's proportionally harder for many to pay.
So am I correct to say that you want the government to essentially subsidize the low end of the housing market?
It already does. It has to, or there would be even more homeless people on the streets.
In Hawai'i County privately owned rental housing for people below the 80% of poverty line is eligible for a much lower property tax rate. This is the simplest, most direct way to do it.
But mostly what I'm trying to address here is the non-subsidized mid-range housing that is in severe shortage in the state, according to in-depth studies like the Hawaii Housing Planning Study (2011).
I guess it has its pros and cons like anything but people will just adjust to the new structure like they always do and there will be winners and losers. Will these low end rentals be well maintained by the owners or occupants since neither have any incentive to do so? Will lower-middle class families be disincentivized (sp) from improving their situation financially for fear of hitting a hard cut off with a promotion and losing their subsidies or is it a get in and you stay in kind of thing regardless of your current income? Is this subsidy paid for with federal dollars or state/local tax money? Does the subsidy go to the developer or the renter?
You have misunderstood. This is nothing new. The tax break on Fair Market Rent "affordable housing" goes to the owner of the property, who has to document that the rents being collected are actually below the listed poverty level ceilings. And the tenants are audited for eligibility.
But again, that is only the bottom 10-20% of the market. It's the people who are trying to get by on middle incomes who are under the greatest pressures.
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I am also still skeptical that you can outpace demand in the long run by building a bunch of new units. HNL is desirable because it is a relatively safe American city, with all of the amenities of a city (jobs, arts, culture, restaurants) that happens to be in a locale with tremendous weather and natural beauty. Those things aren't going to go out of style anytime soon.
No, but there are natural barriers to unlimited growth that we enumerate here endlessly.. high costs of living overall, lower wages and salaries overall, distance from the mainland, doctor and dentist shortages, etc. Nobody is going to be prompted to move here because we alleviate the severe housing shortage. But doing so would improve the quality of life of the people who are already here.
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Sure you can blitz the place with thousands of new units and temporarily meet demand but how long will that last? It is still an island with limited land, high property values, and a desire to retain it's character and beauty. You never really address this issue when you respond to me. What about the 200,000 Hawaiians scattered across the country, many of them maybe wanting to return home? What about the people with telecommuting jobs that can live anywhere? What about folks that always wanted to move to Hawaii but haven't because it was unaffordable? What about recently wealthy Chinese that are coming to the U.S. in high numbers? I guess what I am getting at is that there will always be a shortage of housing until it becomes so dense and overpopulated that the quality of life goes to sh*t.
But that's the point. It already has passed that point for a lot of people, and the number of homeless has risen dramatically in the last couple of years. Roughly 1/3 of the homeless in Hawai'i have jobs. They just can't pay the rent. And as the article says, about 46% of the renters in the state are just a single "personal emergency" away from being in the same place.
Who knows though, I'm not an expert on this stuff. What do you think about this HDCA proposal for micro units in Kakaako? Is this what you are hoping for?
Well, yes, that is a partial solution, which addresses the disappearance of low cost housing for singles, the elderly, and so on. That piece also highlights the changing demographics of the state, and this type of housing is a fit for one segment of the whole. Not for everyone, but for people who live alone and don't have much personal property. A friend on the mainland is developing a Senior Cooperative Housing project based on this concept, which was pioneered in Seattle to appeal to Millenials... very small simple personal space, with shared kitchens, some with shared bath facilities, with limited parking, on public transit routes. And of course, below market prices. It's an innovative way to increase density at lower cost.
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